According to Canada Revenue Agency (CRA) statistics for the 2023 contribution year, Canadians aged 60 to 64 held an average Tax-Free Savings Account (TFSA) fair market value of roughly $45,109. Honestly, that is not terrible.
By that stage of life, many Canadians are also drawing from or building other retirement income sources like workplace pensions, Registered Retirement Savings Plans (RRSPs), Canada Pension Plan (CPP), and eventually Old Age Security (OAS). Some of them probably just finished paying off a mortgage too. The TFSA is often just one part of the broader retirement picture.
Still, if there is one account many Canadians should arguably prioritize over time, it is probably the TFSA. Unlike Registered Retirement Savings Plan (RRSP) withdrawals, TFSA withdrawals remain completely tax free and do not increase taxable income later in retirement. That flexibility becomes especially valuable when managing taxes, government benefits, and retirement cash flow.
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How asset allocation changes as you age
One of the biggest investing mistakes people make is assuming the same portfolio should work for every stage of life. In reality, your ideal asset allocation often changes over time.
When investors are younger, portfolios generally tilt more heavily toward equities because there is a longer time horizon available to recover from market downturns. Younger investors also tend to prioritize growth and long-term compounding over stability or income.
As retirement approaches, though, many investors gradually begin increasing bond exposure. This risk-off process is commonly referred to as a glide path.
The goal is not necessarily eliminating volatility entirely, but rather reducing the risk of suffering a severe market decline right before or during retirement withdrawals. Bonds can help stabilize a portfolio and provide a source of liquidity during equity market downturns.
That balancing act between growth and stability is exactly why balanced asset allocation funds have become increasingly popular among older investors.
Why VBAL stands out
One example is the Vanguard Balanced ETF Portfolio (TSX:VBAL). VBAL maintains a globally diversified 60/40 portfolio consisting of roughly 60% equities and 40% bonds. The ETF currently offers a trailing 12-month yield of roughly 2.1% with quarterly distributions.
The equity portion includes exposure to Canada, the United States, international developed markets, and emerging markets, although like many Canadian asset allocation funds, the ETF still maintains a modest home-country bias toward Canadian stocks. The bond allocation helps reduce portfolio volatility while still allowing investors to maintain meaningful exposure to long-term equity growth.
VBAL also remains fairly cost efficient. The ETF currently carries a 0.24% management expense ratio (MER). Vanguard recently reduced the management fee from 0.22% to 0.17%, so I think investors will likely see the ETF’s MER decline closer to roughly 0.19% once the updated figures fully flow through.
For 60 year old TFSA investors approaching retirement who want something broadly diversified, relatively hands-off, and more balanced than a pure equity portfolio, VBAL remains one of the more straightforward solutions available.
